From the Solar Entrepreneur: Going Solar Without The Panels

From the Solar Entrepreneur:Going Solar Without The Panels

Often at Brick & Wonder, we meet a professional who seems born to tell a story. We recently ran into the gregarious Jason Kaplan at a benefit party for NYC’s noble Solar One organization. He told the story of the venture he’s part of in such a compelling way that we had to share the idea: you can tap into the solar marketplace, without installing panels anywhere on your property.

With “community solar” you “subscribe” to the power generated by independent solar array developers and immediately see your eco impact and your $ savings on your existing utility bill. We asked Kaplan to pitch us again, on the record this time.

Jason Kaplan: PowerMarket is the leading community solar software provider that serves utilities and third party solar developers. We shift the burden and risk of managing and administering community solar projects and their subscribers onto our platform. We can manage multiple solar projects across different states through multiple products that best serve solar subscribers, making sure they’re happy, sticky and pay their bills on time!

This ensures that solar projects are cash flow positive, earn revenue and can pay the developer and financing parties a good return.

Over the course of your participation you might have saved $300, taken 17 cars off the road or reduced greenhouse gas emissions by 1.37 tons.

B&W: So the cost of their installations gets distributed through your network of subscribers?

JK: The developers have their cost of plant, construction and materials related to their project, and through the contracts they execute with our subscribers they recover those costs and eventually earn income and a margin as well.

We provide a turn-key service to our energy clients including customer acquisition -- going out and sourcing eager, mission driven folks. They may not always be driven by sustainability, but motivated to save money on their utility bills!

We enroll energy consumers onto our platform and find the appropriate allocation of a community solar project that best suits them. We inform them what credit they will see on their existing utility bill associated with participation in a particular community solar project.

For example, you see a $100 credit on your utility bill. We charge you $90 for that credit and you realize the 10% savings. Over the course of your participation you might have saved $300, taken 17 cars off the road, reduced greenhouse gas emissions by 1.37 tons. Those are the kinds of impact metrics we can show our consumer clients.

They’re signing up for community solar because they may not want to buy a rooftop solar array, or their roof is shaded, or they would love to participate in the clean energy revolution, but they’re a renter. This way people can participate in solar, knowing they’re doing something great for the environment and for local economic development.

JK: Community solar is a term that came about around four years ago. When people says “solar”, most assume it’s rooftop solar -- called "distributed generation" -- where the energy from that array goes directly to serve the onsite energy demand. With community solar, the solar array is not located on your roof, but it could be located on a warehouse roof nearby in the city or sometimes it’s ground-mounted. The energy from the solar array goes into the grid and the utility recognizes it as solar energy from a particular project. As the consumer, you then get credited for the allocation that you have in the array itself. They are generally not utility scale systems, they're smaller projects between 2 and 5 megawatts serving the communities that build them.

Installation taking place under Massachusetts' new Smart Solar program

B&W: How does the revenue stream you manage encourage solar “developers”.

JK: We don’t actually guarantee revenue; we provide a service where we take on certain risks, but we don’t take on the income or market risks. Whether they’re investors or developers, they do a lot of due diligence and financial modelling to determine the value proposition. For instance in Massachusetts there’s a new Smart program that provides a 5 cent per kilowatt hour incentive to the production from community solar. That kind of policy boost tips the scales in favor doing a community solar project as opposed to doing just a single offtake.

B&W: Who are your retail customers - buildings and landlords or individuals?

JK: We do a little bit of both. The ideal clients are residential customers, religious institutions and small businesses. When a business gets a bit bigger, because of their “rate class”, the savings value just isn’t there.

The funny thing is that many of our potential customers don’t know this kind of product exists. They’ve just never heard of it before. Once you educate folks on this opportunity -- and they certainly are like minded, and obviously want to see a reduction of their utility bill -- people are eager to sign up. There’s no real hard sale - no upfront cost, you can cancel any time for no reason, it’s healthy, and you’ll start saving on the first month that the project comes online.

B&W: What kind of savings?

JK: Right now, the industry standard is either a cent below their kilowatt hour rate or a ten % discount on the value of the credit that the customer is getting.

Example of a "single offtake" distributed generation site - where the panels only serve the business that installed them

B&W: A big part of your product is software to handle “paperwork” and billing. What kind of tech are you using to solve that?

JK: Our founder, Eric Dahnke, is the quintessential tech founder. He is a software engineer and did enterprise software in financial institutions and at PSE&G in New Jersey.

The spark that went off in his head was seeing this new community solar industry coming forth and not seeing the technology platform that would be able to support it. The backbone of the platform comes from financial services and utility technology, so we have a payment gateway that enables automation of all billing.

For developer clients, we do all the wok managing their portfolio by giving them the transparency to see how their projects are performing. On the subscriber side, we have a subscriber dashboard that allows each and every subscriber on every project to see what their impact has been and what the production of their array is, what their savings have been over time, etc.

A Bronx Solar Array that PowerMarket serves

BW: What sort of individuals, outfits or businesses develop solar arrays? Who are those people and what is the typical profile?

JK: It runs the gamut, but all the developers who’ve built single offtake arrays throughout the country see the value proposition around community solar and the value of capturing the residential retail rates.

You’ve got the Engineering, Procurement and Construction (EPC) developers, asset managers, funds of millions of dollars looking for a diverse portfolio that returns good long-term income. The cash flows theoretically could just be a widget for all they care, but it’s community solar and yields a good rate of return. They investing in and acquire these assets and have the likes of us do all the heavy lifting on managing it. And they love seeing the checks clear every month obviously - that’s the goal!

JK: Eric started this company four years ago and it was just him. We’ve boot-strapped the company since its origination and we’re really proud of that. I want to tout the support we’ve had from the NYC Acre and Urban Future Lab. It’s a very selective community of clean energy companies, and we’ve been there for some time now, mostly because we love it so much. The Urban Future Lab continues to feed the opportunities that we are able to service - the level of support we get from them is tremendous.

We were awarded a Department of Energy small business innovation grant for over a million dollars last year. That certainly helped, but we haven’t raised a single dollar of outside capital.

Our initial clients Syncarpha Capital and Rocky Mountain Power have been in our stable from the start and helped us leverage new business and expanded their own.

This is really a catalytic point in our trajectory and we’re extraordinarily excited for the future of solar in the city but also across the country.

An urban rooftop solar array layered over an energy efficient green-roof - a new gold standard for urban design. Photo by Julian Wildner.

BW: It’s certainly a feel good story, but what have been some of the challenges?

JK: The last two years have been really challenging. People have been discussing and theorizing and hoping to build community solar for four years now but there wasn’t much action in the marketplace. That’s policy related, and certainly administration related as there’s hesitancy to put money into renewable assets and the recent solar tariffs that were levied had a chilling effect on this type of development

That said, over the course of the past few months we’ve seen an incredible maturity in the market. Investors and financial institutions that provide tax equity and debt are really looking at community solar in a different light. They may have seen an asset that was very risky, but are now seeing a tremendous opportunity.